The World Bank has upgraded El Salvador’s economic growth projection to 3.2% for 2026 in its latest Global Economic Prospects report. This 0.2 percentage point increase from January’s forecast aligns closely with the country’s Central Reserve Bank expectations of 3% to 3.5% expansion.

This upward revision stands out sharply as the multilateral lender downgraded its economic forecasts for most of El Salvador’s neighbors, including Costa Rica, Honduras, and Panama, while keeping Guatemala unchanged. Only El Salvador and Nicaragua saw positive adjustments. Even with recent cuts, Panama remains the regional leader with a projected 3.9% growth, followed by Guatemala at 3.7%, Costa Rica at 3.5%, and both Honduras and Nicaragua at 3.4%.

This regional divergence occurs against a volatile global backdrop, where escalating geopolitical conflicts in the Middle East threaten to decelerate worldwide growth to 2.5% in 2026. Severe disruptions in the Iran-controlled Strait of Hormuz are crippling energy corridors, potentially driving Brent crude oil prices to an average of $94 per barrel—a staggering 36% surge from 2025 levels. These energy shocks, compounded by rising fertilizer costs, are expected to push global inflation up from 3.3% to 4.5%.

The World Bank warned of severe downside risks, noting that deeper financial stress and energy supply blockages could plunge global expansion to a devastating 1.3%. “However, the downside risks are significant. If energy supply disruptions prove more severe than currently assumed and are accompanied by substantial financial stress, global growth could fall,” the multilateral stated. Meanwhile, Latin America as a whole faces a modest growth path, projected at 2.2% this year before accelerating to 2.5% in 2027.